A sales contract can look complex, but it consists of standard clauses that are individually easy to understand. The following standard clauses require most of your attention: (Our comments and suggestions for a fictional $200,000 home follow each numbered clause).
1. Purchase and Sale
The undersigned buyer ("Buyer") agrees to buy and the undersigned seller ("Seller") agrees to sell the property described below under the terms and conditions hereinafter set forth, which shall include the standards for real estate transactions set forth within this contract. Location of property:
||Lot 21, block 13, platte 49, Dekalb county, GA
|ALSO KNOW AS:
||221 Fenimore Street, Decatur, GA, 30087
This is as easy as it gets. Copy the legal description from your deed. If you can't find the legal description leave the space blank and write in the street and city address on the next line. In most contracts you will also have to fill in your name and the name of the Buyer in this section.
|2. Purchase Price and Method of Payment.
The purchase price to be paid by the Buyer at closing is: __ two hundred thousand ___dollars.
|This agreement is made conditioned upon Buyer's ability to obtain a mortgage loan in the principal amount of _____ 90__% of the purchase price listed above.
|Earnest money deposit to be held in trust by: Arnold & Palmer, Esq._____
|Buyer warrants that Buyer will at closing have additional cash in the amount of nineteen thousand dollars
Write in the selling price of your home then find out how much of a cash down payment the Buyer plans to make and how big a mortgage loan he will need. (In our example, this Buyer needed a $180,000 mortgage loan.)
- If your potential Buyer has been pre-approved by a lending institution for a big enough mortgage loan, you are all set.
- Do not enter into a contract unless your buyer has at least been pre-qualified for a mortgage loan big enough to purchase your home.
The Buyer normally deposits at least $500 in "earnest money" or "binder" for a home under $80,000, and $1000 for one priced higher. A "binder fee" or "earnest money" is a deposit on the purchase price and insures that the potential Buyer is serious. The check is made out to the Seller but is held by a third party, usually the Buyer's real estate agent or the Seller's attorney, but it can be held by anyone stipulated by the Buyer and the Seller in an Escrow Agreement. Escrow Agreements are available at large office supply stores or downloaded from our web site (a few states require special contracts).
4. RESTRICTIONS, EASEMENTS, LIMITATIONS. The buyer shall take title subject to: (1) Zoning, restrictions and requirements imposed by government authority, (2) Restrictions and controls appearing on the plat or common to the subdivision, (3) Public utility easements of record, provided said easements are located on the side or rear lines of the property, (4) Taxes for year of closing, assumed mortgages, and purchase money mortgages, if any, (5) Other:________None___________________________________ Seller warrants that there shall be no violations of building or zoning codes at the time of closing.
Most homes won't have "Other" special restrictions, easements or limitations. If you do have a unique restriction, write it in the space provided.
7. GENERAL INSPECTION. The Buyer or his agent may inspect premises of the property at least 15 days prior to closing. Inspection may include appliances, heat and air conditioning systems, electrical systems, plumbing, machinery, sprinklers and pool system included in the sale. Seller shall pay for necessary repairs. Within 72 hours before closing, buyer shall be entitled, upon reasonable notice to Seller, to inspect the premises to determine that said items are in working order.
The above is usually followed by a Roof Inspection, and Termite Inspection clause, each requiring the Seller to pay for the repair of any damages.
One way to avoid charges arising from inspections is to stipulate that the property is being sold "As Is." This can be written in under Special Clauses.
18. CLOSING DAY. This contract shall be closed and deed and possession shall be delivered on or before the _Fifth_____ day of ____July________________,____2012___(year), unless extended by other provisions of this contract.
Usually 30 to 45 days from signing of the contract, but can be set to coincide with your moving plans.
22. RADON GAS DISCLOSURE. As required by law, the Seller makes the following disclosure: "Radon Gas" is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present a health risk to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in __________________________. Contact your county public health unit for additional information regarding radon and radon testing.
Write in the name of your town if you know that radon levels higher than federal standards have been found in buildings in your town, otherwise leave blank.
SPECIAL CLAUSES. All parties agree that the Property is being sold "as is," with all faults including lead-based paint and lead-based paint hazards. The seller shall have no obligation to make repairs to the Property.
Anything written in under "Special Clauses" supersedes the printed provisions of the contract. As an example, we filled in a clause to sell the home "As Is." We don't usually suggest selling "As Is" because an "As Is" home will sell for less than a normal home.
Note: See an attorney for legal advice. This web site is not intended to give legal advice.
COMMISSION TO BROKER. The Seller hereby recognizes _Coldwell Banker___as the broker in this transaction, and agrees to pay as commission __7__% of the gross sales price, the sum of _fourteen thousand __Dollars ($14,000__)
This is what you want to avoid: By selling your home without a real estate broker, you can leave this section blank and save up to seven percent of the sales price, (or $14,000 in this example of a $200,000 house).
Where to get sales contracts:
- Under $20 at Office Depot, Staples and other office supply stores. Ask for "Agreement to Sell Real Estate." (To be valid in all 50 states, these forms include clauses to handle regional issues like termite inspections, necessary in south-eastern states but not a concern in Alaska.)
- Free from your neighborhood real estate agent. (These tend to be more complex documents, loaded down with commission splits and mortgage details more helpful to an agent than to the Seller and Buyer.)
- Downloaded from our web site along with other forms and contracts needed to sell your home (several states require special contracts). You can download our forms & contracts to your computer or we can send them by email.
- In most states, the seller must provide a disclosure form, or check-off list where the seller indicates known problems with the property.
- Homes built prior to 1978 also require a Lead Based Paint Addendum where the Seller states that he has no knowledge or record of lead-based paint hazards on the property.
- Standard disclosure forms and Lead Based Paint Addendums are included in our set of forms & Contracts which can be downloaded or emailed to your computer or mailed to your home.